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Bitcoin Achieves Historic ‘Golden Cross’ Amidst Market Shifts

Bitcoin's 50-Week SMA Surpasses 200-Week SMA for the First Time

Jan 17, 2024
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Bitcoin's Golden Cross in weekly moving averages etches a historic milestone in the annals of the digital currency.

Bitcoin recently achieved a significant milestone - the first “golden cross” on a weekly basis. This event, marked by the 50-week simple moving average (SMA) of Bitcoin’s price exceeding the 200-week SMA, is a first in the esteemed cryptocurrency’s history.

The golden cross, confirmed when the 50-week SMA of Bitcoin surpassed the 200-week SMA, is a term rooted in Japanese technical analysis literature. Its counterpart, the “death cross”, occurs when the short-term SMA dips below the long-term SMA. These crossover events are often interpreted by market participants as potential indicators of future market trends. The ‘golden’ variant is typically seen as a sign of a long-term bullish market.

However, this optimistic interpretation isn’t without its critics. Since averages are derived from historical data, they tend to trail current prices. Essentially, averages are a reflection of past events. For instance, the inaugural weekly golden cross was a result of a price surge of over 70% to $42,700 within a span of four months.

Consequently, seasoned traders view these crossovers as lagging indicators, which often align with a trend slowdown. A case in point is the confirmed weekly death cross at the onset of 2023, which coincided with the bear market’s nadir. The daily crossovers of the ‘golden’ and ‘death’ on the Bitcoin chart have a mixed track record in forecasting bullish and bearish trends.

The recent Bitcoin rally has already started to lose steam, with the cryptocurrency trading 10% lower from the near $49,000 highs recorded following the launch of 11 spot exchange-traded funds (ETFs) in the United States the previous week. Observers suggest that the dip in bullish sentiment is due to the market’s overblown expectations regarding the initial ETF inflows.

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